YieldBoost AYI To 8.3% Using Options

Shareholders of Acuity Brands Inc (AYI) looking to boost their income beyond the stock's 0.4% annualized dividend yield can sell the December 2020 covered call at the $155 strike and collect the premium based on the $10.90 bid, which annualizes to an additional 7.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.3% annualized rate in the scenario where the stock is not called away. Any upside above $155 would be lost if the stock rises there and is called away, but AYI shares would have to advance 19.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 27.4% return from this trading level, in addition to any dividends collected before the stock was called.